What does wholesale mean, and how can companies charge a lower price per item because of it?
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**Manufacture:** Someone who makes a product.
**Wholesaling:** Selling product to a retail store rather than DTC (Direct To Consumer)
**Manufacturing cost:** How much money it costs the manufacturer to make each product.
**Wholesale price:** How much money the manufacturer sells their product to the retail stores. This is the manufacturer’s revenue, and the retail store’s costs.
**Retail price:** What the retail stores sell the product for. This is the retail store’s revenue.
**MSRP:** Manufacturer suggested retail price.
Depending on the contracts, the retail store may or may not be to sell lower than MSRP (which is why same tv at BestBuy is the same price at Walmart).
Some stores sell products as a bundle at a discount, **”volume pricing”**. For instance, a 20pc McNugget is cheaper than 2x 10pc McNuggets. If a store does not offer this, it’s likely either contractual or they do so much business that there is no need to offer a discount, as they can sell out of the products individually (think of it like this: a car salesmen is not going to negotiate the price of a car with you if they know someone can walk in 5min later and pay full price).
Another reason they may offer this is debit/credit card transaction fees. They not only are a fixed % of the same price but also a fixed $ amount (say 10¢). 1000 water bottles sold individually for $1 with a 2%+10¢ fee results in $300 lost. $1000 water bottles sold all together for $1000 with a 2%+10¢ fee results in $200.10 lost.
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